Home
 |
What is the difference between Activity-based costing and traditional cost accounting? |
Answer
Activity-based costing is a more accurate cost management system than TCA. One would use the ABC method when overhead is high, products are diverse, cost of errors high and competition is stiff.
Traditional Cost Accounting is unable to calculate the 'true' cost of the product. TCA arbitrarily allocates overhead to the costs of objects.
Total company's overhead is allocated to the products based on volume based measure e.g. labor hours, machine hours.
First answer by Christina Athens. Last edit by Christina Athens. Contributor trust: 333 [recommend contributor]. Question popularity: 51 [recommend question]
- Activity-based costing
- The Difference Between Us (performed by Tina Turner)
- What is the difference between net income and cash flow including the way each is shown on the financial statements?
- What account is credited when recording the cost of merchandise sold for cash based on the perpetual inventory system?
- Whty golden rules of accounts are not applicable everywhere?
- What do you mean by nature of transaction?
Answers.com > Wiki Answers > Categories > Business and Finance > Business > Business Accounting and Bookkeeping > What is the difference between Activity-based costing and traditional cost accounting?
Our contributors said this page should be displayed for the questions below. (Where do these come from ) |
| If any of these are not a genuine rephrasing of the question, please help out and edit these alternates. |
